Moody’s affirms ratings on BBVA Compass

Moody’s Investors Service has affirmed its current downgraded ratings on BBVA Compass after assessing the bank’s impending acquisition of Guaranty Bank.

The rating agency reiterated its overall negative rating outlook on BBVA Compass, announced in July, but noted that the acquisition of Guaranty Bank assets will “significantly” strengthen the bank’s presence in Texas.

“Compass has a good recent integration track record, successfully assimilating three Texas banks within the past 18 months,” the agency said.

BBVA Compass acquired most of the $13 billion assets of Guaranty Bank, a unit of Austin-based Guaranty Financial Group Inc., after the bank was shut down Aug. 21 by federal regulators.

Compass will receive an additional investment of $440 million from its parent in the form of common stock as a result of the transaction. BBVA Compass is the U.S. banking arm of Spanish financial giant Banco Bilbao Vizcaya Argentaria SA.

Ratings on Compass’ senior debt, financial strength and long-term deposits were all affirmed.

The negative outlook reflects the risks related to the company’s own real estate concentrations and the potential that more economic stress than is expected might lead to weaker results, which may put pressure on the company’s capital base.

Separately, Standard & Poor's Ratings Services on Aug. 26 affirmed certain credit ratings for Compass and revised the outlook to stable from positive, while lowering the rating on the bank's preferred shares to BBB+ from A-, due to increased industry risk.